Fed's Kocherlakota (non-voter, dove): Inflation is too low to raise interest rates, tightening policy would put the Fed further away from its policy goals - financial press
- Inflation is running substantially below the Fed's 2% target and the outlook is for more of the same
- Raising interest rates would create profound economic risks for the economy
- Tightening rates by even 0.25% would not likely have a huge direct impact on the economy, but even this small change would lead some to assume the Fed had implicitly lowered its inflation target from 2%
- If markets believe the Fed has lowered its inflation goal, all real interest rates in the US will be higher
- By setting policy in a direction opposite its stated goals, the Fed would diminish the credibility of those goals